With recreational marijuana on the cusp of legalization, businesses across Illinois could see a vast marketplace suddenly accessible. A recreational marijuana legalization bill was recently introduced in the Illinois legislature. The proposed bill puts small businesses in an especially advantageous position, promoting “craft growers” and banning large-scale operations. Without a corporate presence dominating the field, local cultivators and retailers will be free to blossom.
What’s the law right now?
Although derived from a single source, not all pot products are created equal. Marijuana, the buds of the cannabis plant, contains the psychoactive chemical tetrahydrocannabinol (also known as “THC”) and gets the user high. Hemp, made from cannabis stalks, possesses no mind-altering properties and has many industrial uses.
Currently, medical marijuana and hemp are legal in Illinois. The growth and recreational use of marijuana are still illegal, though possession of small quantities (10 grams or less) has been decriminalized. Those caught with this amount face a fine instead of jail time. This includes all forms of the cannabis flowers and buds, such as:
- Hash oil
- Seeds that could sprout into a new plant
- Infusions (edibles, teas, lotions, etc.)
- Resin extracts
What are the proposed changes?
The pending legislation would legalize recreational marijuana. Starting January 1, 2020, adults over 21 could legally purchase cannabis for recreational use from licensed dispensaries. The first licenses for Illinois growers, processors, and dispensaries would be issued sometime around May 2020.
The proposed bill caps the total number of licenses issued, as well as how many a single applicant can obtain. There are two separate application periods for recreational facilities. The first starts in mid-2020, in which the state will award licenses for up to 75 stores, 40 processors, and 40 craft growers. The second begins in December 2021, containing an additional 110 store licenses and 60 for both processors and craft growers.
The bill allows Illinois residents to possess up to 30 grams of marijuana and permits growers and retailers to set up shop. Non-residents could possess up to 15 grams. Neighborhoods disproportionately affected by criminal marijuana convictions, primarily minority communities, are especially empowered to participate in and benefit from the new market. “Social equity” applicants from these areas can qualify for low-interest loans and reduced license fees, enabling their entry into a field protected from large-scale growers. In addition, an estimated 800,000 drug convictions may be expunged.
Governor Pritzker’s office released a summary of the bill. We’ve pulled out the most relevant details for you:
Social Equity Applicants
- In order to qualify under the “social equity” portion of the bill, applicants must be one of the following:
- Applicants with at least 51% ownership and control by individuals with a residential history (5 of the last 10 years) in a disproportionately affected area
- Applicants with at least 51% ownership and control by individuals who have a criminal offense that would be expunged by this Act, or who are a member of an impacted family
- Applicants with at least 51% of current employees who reside in a disproportionately impacted area, who have a criminal offense that would be expunged by this Act, or who are a member of an impacted family
- Growers: $100,000 license fee
- Retailers: $30,000 license fee
- Cultivators: Business development fee of $500,000 or 5% of total sales, whichever is less
- Dispensaries: Business development fee of $200,000 or 5% of total sales, whichever is less
- There are lower fees for “social equity” applicants from minority areas disproportionately affected by drug convictions.
- Consumer Sales Tax
- 10% on products with <35% THC
- 20% on products infused with cannabis
- 25% on products with >35% THC
- Optional Consumer Sales Taxes
- 3% from municipalities
- 5% from counties in incorporated areas
- 5% from counties in unincorporated areas
- 35% invested in the state General Fund (covers most public services – education, human services, healthcare, environmental protection, and more)
- 25% allocated for community reinvestment
- 20% allocated for mental health/substance abuse treatment
- 10% put towards the state’s unpaid bills (currently approximately $6.5 billion)
- 8% allocated for law enforcement training grants
- 2% allocated for public drug education
The state wants to encourage municipalities to allow marijuana facilities within their borders. Any municipality that opposes such facilities must opt out within one year of passage of the bill. After this period elapses, they can only opt out with a voter referendum. Additionally, the proposed bill creates the option for municipalities to earn extra revenue by collecting an extra 3% sales tax on marijuana product. This tax would be in addition to the tax rate imposed by the state, described above.
What does it mean for businesses?
If this legislation passes, we expect to see a flood of excited entrepreneurs wanting to start dispensaries and procure licenses. Existing companies will need to amend their operating agreements, bylaws, and other business documents in order to expand their practice. Additionally, employers across the board will need to understand the new limits of substance use at work. Although nothing in the proposed legislation forbids rules about cannabis in the workplace – in fact, explicit protections for such policies have been proposed – business owners will undoubtedly need to review their current policies and any desired changes. Marijuana’s not just medical anymore.
This bill faces opposition from several groups and is still working its way through the legislature. Recently, concerns arose about the benchmark for expungement, revenue distribution, and the difficulty of enforcement. This is an evolving area of the law in Illinois- stay tuned for updates.
G & G Law can help you grow in a solid, sustainable way. Contact us today for a consultation.
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Journal Star: Changes likely coming to cannabis legalization bill
Illinois Legal Aid: Cannabis or marijuana laws and penalties basics
Governor Pritzker’s Office: Adult Use Cannabis Summary
All activities related to cannabis are currently illegal under the federal laws of the United States of America. Nothing contained on this site nor any of the services that G & G Law, LLC provides are intended to in any way promote or aid with the violation of any applicable law.